RBC Capital Markets takes an interesting take on the Fed’s newly released Fed Funds projections.
First the projections, which look like this: Read more
So here it is — the fifth Chinese rate hike since October last year.
As Reuters reported on Wednesday: Read more
China’s consumer price index rose 5.3 per cent in April, lower than March’s 5.4 per cent increase but still higher than expected, the FT reports. Food prices also rose faster than during the first quarter at 11.5 per cent, compounding political sensitivities. Industrial output nevertheless fell in tandem with producer prices, indicating that the four interest rate hikes since October are cooling growth. However, fixed-asset investment has ballooned 25.4 per cent so far this year, indicating that domestic demand cannot support growth, Bloomberg reports. If fixed-asset investment falls, the central bank may even begin cutting rates by the end of the year, Reuters says.
Investors used to guess when Federal Reserve chairman Ben Bernanke would finally raise rates and begin tightening the Fed’s extraordinary support to the US economy, the WSJ says – but now Europe is doing his job for him. Meager job growth and high costs for risky debt will probably add to worries over European sovereign debt in pushing the Fed to wait even longer.
While Europe’s sovereign debt crisis has grabbed the attention of global markets, inflation is again clawing its way back in emerging economies, as Philip Poole of HSBC notes on the FT’s Beyond Brics blog. China provided more evidence of this trend on Tuesday, with the release of CPI data for April which showed inflation continuing to move higher.
As the FT reported, both Chinese inflation and housing price rises continue to quicken, with consumer price inflation rising to 2.8 per cent in April from 2.4 per cent the month before – its highest in 18 months, although still short of the government’s 3 per cent target – while factory-gate inflation jumped to 6.8 per cent from 5.9 per cent. Read more
India raised interest rates for the second time in a month on Tuesday in a bid to contain consumer prices that have been some of the fastest rising among the world’s large economies, reported the FT. India is the largest economy to tighten monetary policy with successive rate rises as its recovery from the global economic downturn gathers steam. Industrial production has picked up over the past six months to record double digit growth, while the agricultural economy is expected to regain its strength this year with better seasonal rains.
The Chinese economy grew at 11.9 per cent in the first quarter from a year ago, underlining the rapid recovery from the global economic crisis, the FT says — but the data raise fresh questions about the risks of overheating. The pace of growth puts new pressure on Beijing to consider tougher tightening measures, including appreciation in the exchange rate and increasing interest rates. FT Alphaville also notes an odd rise in Chinese consumer credit.
FT Alphaville looks at the temporary nature (or otherwise) of the Chinese trade deficit. Read more
Golomt, for the uninitiated, is a Mongolian bank whose CEO announced plans on Friday to make an IPO abroad between 2012 and 2013. Hong Kong is favoured, according to a (Chinese) Reuters interview.